Japan welcomes LNG supplies from Sakhalin-2

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Feb. 13 -- Japanese Prime Minister Taro Aso and Russian President Dmitry Medvedev are scheduled to attend a ceremony Feb. 18 on Sakhalin Island to mark the onset of operations at the Sakhalin-2 LNG liquefaction plant at Prigorodnoye.

Under the Sakhalin-2 project, natural gas will be transported from offshore fields to the Prigorodnoye liquefaction plant for the production of 9.6 million tonnes/year of LNG, with 60% of it bound for Japan.

Under contracts of as long as 20 years, Russian LNG will account for 7% of Japan's total LNG imports, allowing the Asian nation to diversify its sources of energy supply.

At their Feb. 18 meeting, the Russian and Japanese leaders also will discuss possible funding for future LNG projects, such as Sakhalin-3, according to Eiichi Sasaki, energy representative for the Japan Bank for International Cooperation (JBIC).

In fact, Sasaki told delegates at the Russian Shelf 2009 conference that JBIC "is prepared to support Sakhalin-3 if Japanese companies are involved." He added that JBIC is primarily interested in projects in the Far East and Sakhalin that are focused on energy supply to Japan.

The Sakhalin-3 project includes the Veninsky block being developed by Russia's state-owned OAO Rosneft and China's Sinopec, and the Kirinsky, East Odoptinsky and Ayashsky blocks which have yet to be assigned.

Sakhalin-3 is expected to come on stream in 2017-20, according to Russia's draft Gas Industry Development Strategy, with peak production reaching as much as 28.6 billion cu m/year of gas.

The onset of supplies of LNG from Sakhalin-2 coincided with reports that a consortium of Japanese utility firms has agreed to a drastic cut in supplies from Indonesia, falling to 2-3 million tpy from 12 million tpy.

Raden Priyono, chairman of Indonesia's upstream oil and gas regulating body BPMigas, said that under the new agreement, the Japanese consortium will buy 3 million tpy of LNG during 2011-15, and 2 million tpy during 2016-20.

The consortium, comprised of Kansai Electric Power Co., Osaka Gas Co., Chubu Electric Power Co., Kyushu Electric Power Co., Toho Gas Co., and Nippon Steel Corp., will buy a total of 25 million tonnes of gas from Bontang LNG plants in East Kalimantan.

Priyono, who said that Japanese buyers have agreed to waive any penalties for undelivered LNG, added that the new contract price will be "much higher" than the price under previous contracts.

According to analyst BMI, the contract revisions, together with Indonesia's consistent failure to deliver contracted volumes over the past few years, will encourage Japan's "diversification of imports and greater reliance on other regional suppliers."

Contact Eric Watkins at hippalus@yahoo.com.

Related Articles

Shell cancels Arrow LNG project

01/30/2015

Royal Dutch Shell PLC has abandoned its plans for what would have been a fourth coal seam gas-LNG project at Gladstone in Queensland.

DOE could meet 45-day LNG export decision deadline, Senate panel told

01/29/2015 The US Department of Energy would have no trouble meeting a 45-day deadline to reach a national interest determination for proposed LNG export faci...

Douglas Channel LNG moves toward 2018 startup

01/29/2015 Exmar NV, EDF Trading, and AIJVLP, a joint venture of AltaGas Ltd. and Idemitsu Kosan Co. Ltd., have taken full ownership of the 550,000 tonne/year...

Mitsui charters two more LNG ships for Cameron export project

01/29/2015 Mitsui & Co., Ltd., Tokyo, reports contracts for chartering two new ships to transport LNG to Japan from the Cameron LNG export project in Loui...

US House approves bill aimed at increasing LNG exports

01/28/2015 The US House of Representatives passed a bill aimed at increasing US LNG exports by requiring the Department of Energy to determine whether a proje...

Americans warm up to gas

01/26/2015 As you pick up the latest edition of OGJ after another volatile day in oil and gas, collapse into your favorite chair that's stationed next to your...

Gazprom’s Baltic LNG project to be built in Ust-Luga

01/23/2015 OAO Gazprom has determined that its 10-million-ton Baltic LNG plant will be built near the seaport of Ust-Luga, Leningrad Oblast, Russia. The proje...

Gorgon LNG project signs LNG supply deal with SK Group

01/21/2015 The Chevron Australia-led Gorgon LNG project offshore Western Australia has signed a binding sales and purchase agreement to supply 4.15 million to...

Magnolia LNG signs MOU for fourth train

01/19/2015 Magnolia LNG LLC (MLNG) signed a memorandum of understanding with Kellogg Brown & Root LLC, a wholly owned subsidiary of KBR Inc. (KBR), and SK...
White Papers

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by

The impact of aging infrastructure in process manufacturing industries

Process manufacturing companies in the oil and gas, utilities, chemicals and natural resource industri...
Sponsored by

What is System Level Thermo-Fluid Analysis?

This paper will explain some of the fundamentals of System Level Thermo-Fluid Analysis and demonstrate...

Accurate Thermo-Fluid Simulation in Real Time Environments

The crux of any task undertaken in System Level Thermo-Fluid Analysis is striking a balance between ti...

6 ways for Energy, Chemical and Oil and Gas Companies to Avert the Impending Workforce Crisis

As many as half of the skilled workers in energy, chemical and oil & gas industries are quickly he...
Sponsored by
Available Webcasts


Prevention, Detection and Mitigation of pipeline leaks in the modern world

When Thu, Apr 30, 2015

Preventing, detecting and mitigating leaks or commodity releases from pipelines are a top priority for all pipeline companies. This presentation will look at various aspects related to preventing, detecting and mitigating pipeline commodity releases from a generic and conceptual point of view, while at the same time look at the variety of offerings available from Schneider Electric to meet some of the requirements associated with pipeline integrity management. 

register:WEBCAST



On Demand

Global LNG: Adjusting to New Realities

Fri, Mar 20, 2015

Oil & Gas Journal’s March 20, 2015, webcast will look at how global LNG trade will be affected over the next 12-24 months by falling crude oil prices and changing patterns and pressures of demand. Will US LNG production play a role in balancing markets? Or will it add to a growing global oversupply of LNG for markets remote from easier natural gas supply? Will new buyers with marginal credit, smaller requirements, or great need for flexibility begin to look attractive to suppliers? How will high-cost, mega-projects in Australia respond to new construction cost trends?

register:WEBCAST


US Midstream at a Crossroads

Fri, Mar 6, 2015

Oil & Gas Journal’s Mar. 6, 2015, webcast will focus on US midstream companies at an inflection point in their development in response to more than 6 years shale oil and gas production growth. Major infrastructure—gas plants, gathering systems, and takeaway pipelines—have been built. Major fractionation hubs have expanded. Given the radically changed pricing environment since mid-2014, where do processors go from here? What is the fate of large projects caught in mid-development? How to producers and processors cooperate to ensure a sustainable and profitable future? This event will serve to set the discussion table for the annual GPA Convention in San Antonio, Apr. 13-16, 2015.

This event is sponsored by Leidos Engineering.

register:WEBCAST


The Future of US Refining

Fri, Feb 6, 2015

Oil & Gas Journal’s Feb. 6, 2015, webcast will focus on the future of US refining as various forces this year conspire to pull the industry in different directions. Lower oil prices generally reduce feedstock costs, but they have also lowered refiners’ returns, as 2015 begins with refined products priced at lows not seen in years. If lower per-barrel crude prices dampen production of lighter crudes among shale plays, what will happen to refiners’ plans to export more barrels of lighter crudes? And as always, refiners will be affected by government regulations, particularly those that suppress demand, increase costs, or limit access to markets or supply.

register:WEBCAST


Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected